Custodian Direct Deposit into ILUTMA Account?

Answered by:

Question:

On ILUTMA accounts, can the custodian have their paycheck direct deposited into the account?

Answer:

I cannot think of a single legitimate reason for a custodian to do that. Depositing funds into a UTMA account is an irrevocable transfer of those funds to the minor, and use of the funds thereafter for his own personal use (as one might be expected to use one's paycheck) would be a breach of the custodian's fiduciary duties and an abuse of the UTMA account.

If the custodian doesn't have an account of his own into which to deposit his paychecks, he should arrange to cash them.

First published on BankersOnline.com 2/14/11